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Sentiment Indicators Suggest Upward Moves for Equity Markets

Historically reliable sentiment gauges we use as contrarian indicators tell us the equity markets are headed for some profitable upward bounces, particularly for the near term. The CNN Fear/Greed Index at 8 and the Ned Davis Research (NDR) short-term sentiment at 25 indicate the markets are oversold.

Intermediate-term indicators are also adjusting downward suggesting upward market moves. The NDR crowd sentiment is below 50. Meanwhile the Investors Intelligence Bulls/Bears measuring sentiment among market newsletter writers is at 41% bulls and 19% bear. And while this isn’t a solid buy, which would occur when the bulls and bears are equal, it also is indicating the markets should be getting better in terms of investment opportunities.

Longer term we remain cautious based on several technical and economic indicators.


Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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